Sunday, November 20, 2011

Payouts for Unused Sick Time Spike did a good job of discussing a complicated issue. It included both facts that will outrage some (one former MNSCU president got over $120,000 in unused sick time when he retired) and others that provide balance (the money is put into a Health Savings Account and used to cover the fact that most workers don't get any post-retirement health insurance). Also this: "the payments make up less than 1 percent of what the state spends on salaries and benefits..."

Obviously, having a policy like this discourages abuse of sick days, which is all to the good. It's also arguable that it offsets wages that are generally lower than the private sector, at least in many job categories.

Since the payments are based on the wages of each employee, the people with the biggest payouts were the more highly paid managers, administrators and faculty who worked for decades and took little sick time. The average AFSCME member (which represents snow plow drivers, University department clerks and all the folks at the DMV) retired with just $3,587, which won't cover anyone's health care cost for very long.

No one wants to return to the crime rates we had before the 1990s, but our current incarceration rate is higher than acceptable for a democratic republic, and financially unsustainable to boot. The researchers propose rolling the average prison sentence length back to 1984 levels. This would reduce the prison population by 400,000, saving $12 billion (out of a total $70 billion).

They would reallocate that money into three areas:

More police on the streets

More funding for Head Start and other early childhood education

More intervention with young offenders

The cost-benefit ratio of each of those is described. The most impressive, to me, was the idea to provide "functional family therapy" to 300,000 young people on juvenile probation. "FFT costs approximately $2,500 per youth, with a benefit-to-cost ratio that may be as high as 25 to 1 from crime reductions alone."

Finally, Ed Lotterman gives his usual nuanced economic analysis, this time saying Defense, Corporate Spending Can't Be Compared. Defense spending in real dollars is up, way up -- but as a percent of GDP, it's lower than it was during almost all of the Cold War, let alone World War II.

But it's also notable that defense spending bottomed out 1998-2001 and has on an upward track until recently. Some of Lotterman's words:

At some $750 billion, inflation-adjusted spending in fiscal 2011 for military programs of the Department of Defense is at its highest in the past 50 years.

It is more than twice as much as in any fiscal year from 1996 through 2001 and is up $70 billion, or 11 percent, from FY 2009, the last Bush administration budget....

...[the proposed] cuts are from projected levels of outlays that would take place if force levels stayed near current and all scheduled hardware purchases went ahead. Such "cuts" are not the same as actual reductions from this year's spending levels.

This is all background to Lotterman's main point, which is that the Pentagon doesn't operate like a normal business. It has no balance sheet, and doesn't use accrual accounting. This means that equipment purchased in a given year is an expense in that year only, even if the equipment lasts for 30 years, or the bombs aren't used for a decade.

Defense outlays from 2003–2009 understated the true cost of defense because we were using up stocks of ammunition and other expendables and wearing out tanks, Humvees and other Army and Marine Corps machinery much faster than we were replacing them. Even ships and planes not heavily engaged in the war aged. We are catching up by rebuilding war stocks.

He ends by saying he would be willing to maintain current military spending levels if we also went back to the tax levels of the '80s and '90s.

I would also point out another way that the Defense Department is unlike a normal business: It is unauditable. So there's no way to know what happens with any of the money we spend there.

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Third of four daughters, raised in a rural area outside of a small town. Now living in a moderately large city, making media and immersed in other people's media. Finally cleaning out the filing cabinet and loading its contents to the cloud.